Alaska Airlines has scaled back its capacity plans for next
year amid higher fuel costs, though the carrier still expects to resume more
rapid growth in subsequent years, executives said in the carrier's conference
call.
Echoing a
common theme of other airlines in recent weeks, Alaska executives
now say its capacity will rise about 2 percent year over year in 2019, half the
previously estimated growth rate of 4 percent. The carrier's fuel costs rose 38
percent year over year to $475 million during the second quarter, which has
made it difficult to generate returns from capacity growth, EVP of finance and
CFO Brandon Pedersen said.
Chief commercial officer and EVP Andrew Harrison said the
carrier will be "focusing on our strength on the West Coast" and
scaling back redeye service and also cutting back on some of the legacy Virgin
America network. "We expect to reap the benefit of the new markets we
launched in 2017 and 2018 as they mature and expect to add only a handful of
new markets in 2019," Harrison said.
The carrier expects 2020 capacity growth to return to 4 percent,
Pedersen said.
Alaska's passenger revenue increased 3 percent year over
year to $2 billion in the quarter. Traffic rose 6.9 percent as capacity
increased 7.8 percent, pushing load factor down 0.8 percentage points to 86
percent. Yield declined 4 percent.
Alaska reported a net income of $193 million for the
quarter, down from $293 million in the second quarter of 2017.
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